- Jun 6, 2007
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Oil prices today dropped below $19/barrel. Of course the problem is that the U.S. and other world economies are shut down because of Covid19 so demand dropped and although the industry did a great job cutting supply with the Opec-plus deal which largely takes twenty million barrels a day off of supply it still isn't enough America oil storage capacity is going to be hit within a couple of months if not weeks. The White House could do something to help the industry not hit its storage peak in the United States. Although the ideal solution would be the White House buy a 150 million barrels of oil from domestic producers @ $21/barrel or lower and wait three years when the market is strong again and sell at double the price or better and pocket a nice profit for the U.S. taxpayer. The purchased oil could be stored in the Strategic Petroleum Reserve (SPR) which would top off that storage capacity but that would take about three billion dollars and the Democrat House would never vote for that because they are too political it is too much a priority for them to pander to the environmentalist in America and to play into the stereotype that the oil industry are a bunch of demons, greedy and don't care about America.
The White House could still use the SPR option and preserve jobs and protect against some bankruptcies in the industry. Offer the SPR storage capacity to other sovereign countries throughout the world like in Asia or Europe. This would be the deal the sovereign country would have to buy the oil from a domestic producer and the domestic produce would have to sell it at a price of $21/ barrel or lower, the purpose is to stabilize the market not give wind falls to oil companies, and the sovereign country would not have to pay to store it and would not be obligated to remove it for ten years. The further benefit is that it would help that sovereign country economically by giving them a little supply of cheap oil and which country couldn't use some economic help with this covid crisis.
If Democrats and their allies start squawking about this move the President could say it was done out of his intrinsic power to protect the health and safety of the American people. His basis for this claim would be that the oil industry is now talking about taking all these extreme moves to store oil which he would be reducing the need for such action with this program. The industry is talking about storing oil in pipelines; no one can guarantee areas of the country won't see earthquakes if such occurs and one of these pipeline fractures peoples water sources could be contaminated if not a fire resulting. The industry is even talking about storing oil in LNG storage tanks even assuming those LNG tanks and the ancillary equipment is cleaned after such use oil is much more viscous liquid than LNG fluid if later on after all the facilities are converted back to LNG use if some of that oil just happens to build up at a weak connection and the pressure on that connection caused a leak you're talking Natural Gas here if one of those tanks blows it is like a small nuclear bomb going off. If domestic shale producers have no place to store their output and have to shut down a rich field because the pressure will be shut off water will seep into the fractured ground when the field is brought back on line the oil contaminated water will be pushed out resulting in carcinogen contaminated water reservoirs depending on when tapped human beings will be put at a higher risk of cancer!
The White House could still use the SPR option and preserve jobs and protect against some bankruptcies in the industry. Offer the SPR storage capacity to other sovereign countries throughout the world like in Asia or Europe. This would be the deal the sovereign country would have to buy the oil from a domestic producer and the domestic produce would have to sell it at a price of $21/ barrel or lower, the purpose is to stabilize the market not give wind falls to oil companies, and the sovereign country would not have to pay to store it and would not be obligated to remove it for ten years. The further benefit is that it would help that sovereign country economically by giving them a little supply of cheap oil and which country couldn't use some economic help with this covid crisis.
If Democrats and their allies start squawking about this move the President could say it was done out of his intrinsic power to protect the health and safety of the American people. His basis for this claim would be that the oil industry is now talking about taking all these extreme moves to store oil which he would be reducing the need for such action with this program. The industry is talking about storing oil in pipelines; no one can guarantee areas of the country won't see earthquakes if such occurs and one of these pipeline fractures peoples water sources could be contaminated if not a fire resulting. The industry is even talking about storing oil in LNG storage tanks even assuming those LNG tanks and the ancillary equipment is cleaned after such use oil is much more viscous liquid than LNG fluid if later on after all the facilities are converted back to LNG use if some of that oil just happens to build up at a weak connection and the pressure on that connection caused a leak you're talking Natural Gas here if one of those tanks blows it is like a small nuclear bomb going off. If domestic shale producers have no place to store their output and have to shut down a rich field because the pressure will be shut off water will seep into the fractured ground when the field is brought back on line the oil contaminated water will be pushed out resulting in carcinogen contaminated water reservoirs depending on when tapped human beings will be put at a higher risk of cancer!
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